A senior representative of one of BT's largest shareholders said: "Rather than selling minority stakes in its businesses, it may be more efficient if BT was to break the business up and distribute shares in its subsidaries to the existing shareholders. From a shareholder's point of view, demergers are the cleanest solution to seperate the company. Otherwise the company runs the risk of selling shares into a hostile market, using an inefficent, expensive flotation strategy."

A fund manager from another big shareholder, who also asked not to be named, said that breaking up the group through a series of demergers "is an option that should already have been considered".

BT has publicly considered demerging one part of its operations, its highly regulated domestic wholesale business. However, although the company is expected to say that it would like to proceed with that plan, a wholesale split-off would take months to obtain regulatory approval. Demerging its other business units, which include the international network Ignite, as well as the company's Wireless division, however would face fewer regulatory hurdles.

A radical demerger strategy would mirror the approach taken by the former British Gas. In 1997 it demerged Centrica, the domestic gas and utility supplier. Last month it completed a demerger of Lattice, the gas pipeline network, with the assistance of Philip Hampton, then BG Group's finance director, who is now filling the same role at BT.

Centrica shares began trading in 1997 at 55p and closed yesterday at 249.5p. Since the Centrica demerger, shares in the remaining BG Group, the gas exploration company, have more than doubled, closing at 260p yesterday.

However other observers were sceptical of the demerger idea. Analyst Chris Godsmark of Investec Henderson Crosthwaite said: "There have to be different strategies for different parts of BT's business. While a demerger may be appropriate for the wholesale unit, it wouldn't be helpful for mobile. The mobile business still needs cash flows from other parts of the group. There still is a need for a BT."